Vol. 5 Num 430 Thu. August 11, 2005  
Front Page

Power Plant Sabotage
Cops raid office to nab Lahmeyer chief

The police yesterday raided the offices of Lahmeyer International Palli Power Services Ltd (LIPPS) to arrest its chief and his accomplices for sabotaging the Mymensingh 140-megawatt (MW) Rural Power Company Ltd (RPCL) and committing subversive acts.

The government issued arrest warrants against LIPPS chief AZ Rezaul Haq, also known as Captain Reza, and more than seven of his accomplices, including Zahirul Islam, the chief of Sky Engineers, which is also a venture of Captain Reza.

On Thursday last, LIPPS officials engaged in a serious confrontation with the RPCL high officials, its parent organisation the Rural Electrification Board (REB), police, and magistrates. LIPPS was refusing entry to these officials at the plant site. LIPPS finally shut down the 140 MW two-unit power plant, damaged some equipment and fled the area.

LIPPS annually drew $ 6 million for an operation and maintenance contract, signed through an unsolicited negotiation, although it should not have cost more than $ 1 million.

RPCL filed a case against them with the Mymensingh Kotawali Police Station earlier this week. Charges were framed against them under various clauses of the Special Powers Act and the Bangladesh Penal Code.

The charges include hindering the government's works, plundering power plant equipment, illegal gathering of more than five people at the power plant site, sabotaging the power plant and committing subversion.

The maximum penalty for these charges is capital punishment.

This is the first time the government acted against a corrupt axis that has been draining out millions of dollars from the RPCL through manipulating power project deals, plant operation and maintenance contracts and sub-contracts. The Daily Star had been reporting against Captain Reza's deals since the late 1990s, but due to his close connections with the ruling parties no action was previously taken.

"We have raided Captain Reza's office at the Sena Kalyan Sangstha today," said Sub-Inspector Mahbubur Rahman, also the investigation officer of the case. "We did not find any of them. But we will continue the raid."

Meanwhile, a source close to Captain Reza told The Daily Star that Reza and most of his cohorts fled to Singapore soon after Thursday's clash at the Mymensingh plant site. "There is still one of the LIPPS directors in Dhaka who has more than a crore taka in cash. His job is to try to tackle the situation," the source said.

Captain Reza's political backing in the "alternative powerhouse" of the government has also withdrawn support because "the prime minister herself became angry at the audacity of Captain Reza, who has been systematically trying to take over the RPCL by illegally off-loading the government shares there," the source added.

A good number of RPCL and REB officials, who received benefits of different kinds from Captain Reza, including gifts like apartments, are now maintaining a low profile.

Following the Thursday incident, the RPCL board unanimously decided to cancel the contract with LIPPS following a "legal scrutiny". However, a well-placed REB official, who has reportedly received Tk 30 lakh in bribes from Captain Reza beforehand, is now trying to slow down this process, insider sources said.

"There is no need for any legal scrutiny. The parent organisation, Lahmayer of Germany, no longer holds any share of LIPPS because Captain Reza bought them off. He has also bought the RPCL shares of LIPPS illegally. So, there is no stakeholder here to consider--it's entirely Captain Reza's property and the RPCL can cancel the contract right away," said a RPCL source.

Captain Reza and his companies have been keeping RPCL hostage for a long time, draining out millions of dollars by manipulating power plant tenders, sub-contracts, consultancy and operation and maintenance contracts.

A few months back they tried to off-load the government share of RPCL and kicked out government representation there. The government, which remained aloof before that time, decided to take steps and restored the government shares. After that the intelligence agencies started dogging Captain Reza.

Last week, the REB-RPCL officials were visiting the plant site to investigate an allegation of corruption against Sky Engineers, a sub-contractor for the under-construction third phase 70 MW power plant. But LIPPS people resisted their entry, gathered hundreds of people and threatened the officials against any attempts of entry there. To tackle the situation, REB-RPCL officials had to contact the Prime Minister's Office before gathering police reinforcement and enter.

Sky Engineers is owned by the chief of LIPPS, while the third phase plant is being built by German company Seimens, which is also represented in Bangladesh by the chief of LIPPS. This contract was awarded without any negotiation and LIPPS facilitated the deal as consultant.

Captain Reza represented the companies Alsthom and Siemens, which built both the existing two units of the Mymensingh plants--which were very costly. Plus his company, LIPPS, remained as the consultant for the RPCL all along.

Last year, RPCL lost a German grant of 45 million euro dues to the corrupt role of LIPPS, which was exposed by The Daily Star. Allegations of corruption against LIPPS were raised by the Asian Development Bank and German donor KfW in the past.

The LIPPS chief asserted strong influence over RPCL to resist an auditing by the German government. The German government's initial investigation found that the chief of LIPPS illegally remains present at RPCL board meetings and there are many irregularities in the RPCL.